Amazon, Netflix, Hulu, and more are at risk of seeing content cut off by secret backroom deals

It's a seeming golden age for streaming. Many customers are turning to streaming services to get their fix of favorite TV shows without having to (necessarily) pay for expensive DVRs, or remember to record programming. Streamed episodes are available from Hulu, LLC, Amazon.com, Inc. (AMZN), and Netflix, Inc. (NFLX) -- among other services. Other tech giants such as Apple, Inc. (AAPL), Intel Corp. (INTC), and Google Inc. (GOOG) are waiting hungrily in the ranks with new set top boxes and service plansof their own.

I. Cable Companies Want a "Fair Shake" at Streaming

A Feb. 2012 report suggested 100 million Americans (nearly 1 in 3 Americans) watch streaming video, and it suggests cable should be worried. Well apparently they are, and they're taking serious action looking to snatch up rights that could allow them to both unleash streaming services of their own, or block new market entrants.

The LA Timesis citing anonymous comments from "several industry executives" as revealing that DirecTV (DTV), Time Warner Cable Inc. (TWC), and Charter Communications, Inc. (CHTR) are putting in bids to win "over-the-top" rights from multichannel video program suppliers. Those involve are reportedly billing the effort as a "defensive" move, despite their being no current plans to deploy streaming services (versus traditional cable box services).

So what's the true motive? The report instead suggests that cable companies may try to sneak clauses into their programming contracts to install financial barriers to licensing to new streaming services (such as Intel's proposed service).

The bids could also be contingent on programmers dropping their streaming partnerships with other services like Netflix -- although that seems unlikely.

Some fear that big cable may use these OTT purchases to try to dam the stream, so to speak. They argue that big cable's interest seems focused on depriving their internet-age rivals -- and customers -- from streaming content, and in the process forcing customers to continue pricey cable subscriptions.

This is not the first such assault on streaming. Content providers famously "banned" set-top boxes and SmartTVs, such as Google TV from accessing their online content after cable companies pressured them to stop directly providing content. Many networks have cut the number of episodes available on their websites to be streamed to users' PCs.

Big cable argues that it loses a lot of money to streaming. [Image Source: Flickr/Exif]

A DirecTV spokesperson insisted their company's goal was not to drive out the competition, stating, "Our programming deals are confidential so we can't specifically comment, but our one objective in these deals is not to restrict access but to ensure we get equal or better treatment with both existing and new competitors."

Some industry sources say that the content providers won't part so easily with OTT rights. Comments one source, "Most of the major programmers don't agree to it."

II. Government Report Warns of Multiple Anti-Streaming Tactics

But a recent report by the Government Accountability Office (GAO) suggests that programming providers may have good reasons to try to minimize the amount of content they license to streaming service providers, when most of their revenue comes from traditional cable ("multi-channel... distributors"). The report states, "While content providers are interested in providing some content to online video distributors (OVD), their incentive to do so is somewhat constrained by the potential effect on subscriptions to traditional multichannel video program distributors."

The GAO report also indicates that cable companies may exert their control over the internet to try to block streaming, by charging customers extra fees on streamed content. The GAO comments, "MVPDs may have an incentive to charge for bandwidth in such a way in such a way as to raise the costs to consumers for using OVD service."

If a "doomsday" scenario of mass exclusive ownership of OTT rights by cable providers did occur, it would dramatically cut subscriptions to Netflix and other services; it would also damage set-top box makers like TiVo Inc. (TIVO) whose value is partially based on the ability to easily access a compiled collection of streaming services. However, customers could hope in such a scenario that cable companies might opt to eventually offer their own additional subscription streaming services, competing against each other.

But for all the challenges, some fresh faces in the streaming world are charging on. Intel has reportedly turned heads with some very high bids for content and may soon be able to roll out its service. One executive said it was just a matter of time before many of Intel's proposals went through, while another comments, "They are very aggressive."

No, a lot of people wouldn't. The first cable company to launch a real, competitive VOD system that adequately replaces time-slotted TV would be unbelievably profitable. They could sell access to the service AND make money off bandwidth charges (set to a reasonable level).

There is absolutely no reason for cable companies to try to keep the status quo and as soon as one of them realizes that the industry is going to change very quickly. This is big opportunity for the cable companies and they're squandering it. Intel (or someone else) is going to jump in and steal away their lunch if they're not careful. Big cable could be the next Blockbuster Video.

Sadly, it's the big media conglomerates that prevent this. They only offer their channels to cable companies in bundles, and so cable companies are forced to pass these unwanted channels to the consumer.

Not saying that the cable companies aren't anti-competitive as well, and using their monopolies to pull shenanigans that the consumer wouldn't accept if they had a choice... that whole industry is screwed up beyond belief.

Yes. The broadcasters and media companies are the primary reason that a la carte does not exist. You think cable company rate increases are bad? You don't even want to know the extortion that goes on behind the scenes. Media conglomerates pretty much blackmail the cable company demanding outrageous rate increases usually around 300% higher than the year before. And then there is "negotiations" and then they decide that they want to shut off the service. And then the company ends up having to cave and accept higher rates. And then people bitch that their cable price went up. Guess what, what the company pays to provide that service increases a hell of a lot more percentage-wise than the bill does.

This doesn't seem like a viable defense, considering the context of this article. If "Big Media" was beating up cable, why wouldn't they beat up streaming?

A more likely scenario appears to be this: The Internet is breaking old business models in half, and cable is next. Hilariously though, cable seems to be able to fight back a lot harder than some other industries could.

quote: Sadly, it's the big media conglomerates that prevent this. They only offer their channels to cable companies in bundles, and so cable companies are forced to pass these unwanted channels to the consumer.

Yes, but they are opening themselves up for a lawsuit for anti-competitive practices. You may not feel that consumer should be protected when companies try to quash competition, but not everyone agrees. This is no different that Apple and Microsoft working together to try to attack Android. It hurts consumers and needs to be stopped.

No I wouldn't because I'm not a greedy scumbag. If I felt Netflix was a threat I would introduce a competitive offering and beat Netflix. What is being discussed here is illegal and just another attempt by big cable to monopolize consumer choice and force citizens into overpriced cable packages or watch nothing at all.

As usual, this will back fire. If they succeed at defeating streaming with illegal anti-consumer monopolistic practices the market will simply adjust and pirating will increase exponentially. Eventually these greedy morons will learn but it will likely be at the bankruptcy hearing.

That's an idiotic statement. So we protect the thousands of jobs of companies that are scamming millions of customers, instead of protecting the millions of customers that are being swindled by anti-competitive crap like this.

quote: I'm sure you'd love that. All 50,000+ employees for each company kicked to the curb, and suddenly you have no more internet access except for the phone company DSL or satellite. Have fun! :D

1. Some other company would swoop in and scoop up the business before they went bottom up and everyone lost their jobs. I seriously doubt that any competitor would let that opportunity pass. Then the situation would even out and the example would be set.

2. "Too Big To Fail" is an idiotic concept. Why should a company be exempt from failing just because they have a certain number of employees? Markets change, people gain new skill sets and move on.

3. The concept that we dont want to hurt those 50,000 people is a pretty convenient excuse for not wanting to ensure that laws are followed and millions of consumers are protected.

Vertically-integrated media companies are bad news for consumers: period. Having a content owner and a content provider under one roof is a sure-fire way to screw over customers.

You know what? I'm content with Netflix. Sure, the selection sucks at times--but it's still a paltry monthly fee. I've been burnt too many times on "getting into" first-run shows, only to have them abruptly cancelled. No thanks. I'll wait for stuff to hit Netflix. Picky people can pay more to get raked over the coals.

I totally agree and will add that if I want to pay $5-$6 per movie my money will be going to Vudu HDX where I know the PQ and SQ will be excellent on my home theater, AND I CAN SEARCH. Try searching for a title on Charter VOD - not possible. They have a mobile app for pay VOD, but nothing for all of the $included$ VOD based on the channels I subscribe.

Oh, and I'll raise your $175 to $235 for triple play (50M/5M), four HD DVR's and all the movie channels. Just shut up and take my money!

I work for a major cable provider, and I will tell you something- it's never going to happen. It's only going to get worse as shareholders demand ever higher profits to keep the gravy train rolling. Also here's the thing- generally that $99 doesn't include things people want, like DVR, or faster internet, or HBO or whatever. So you add on $15 for DVR, you add on $10 for the upraded internet, $15 for hbo... People don't HAVE to get those things. They CHOOSE to get those things. So stop blaming the cable company 100%, because it's also the CONSUMER who "has to have" all the add ons.

Also when you have a multi billion dollar network to maintain, come talk to me again. You don't even want to know how much it cost to run a mile of fibre optic cable- it's a hell of a lot more than you think it is- upwards of $10k per MILE.

Again, I don't like it, but pricing isn't going down. It would take a major earth shattering change- and I don't see it happening anytime soon.

Amen brother, I would give you plus 9,00000. The worst crap about cable TV is that most people end up watching 3-4 channels at max but you can't just pay for these four, no, you need to get bundled up into a lot of crap you don't need

That crap you don't need doesn't cost the cable company anything to provide for you. As long as a few people watch those channels, they have a purpose in existing, and the media companies won't give the cable companies any lower of a price for not broadcasting those unneeded channels to you.

Their job is to get as much revenue as they can. You wanting only a few channels does nothing to reduce their cost, so they have no reason to charge you less for it.

Those who are adamantly against commercials in streaming content. Like it or not, money wins here. I don't mind ads as much as I mind having to pay a ton of money to cable for the 10-15 channels I want. I'd gladly deal with more commercials if it meant getting more content that I want to watch on streaming services. It takes money to buy the right to shows. Streaming services need to have as much or more than the cable companies.

Of course, but the providers are in bed with the cable companies. CBS, FX, ESPN, etc. will not release first runs on NetFlix or Hulu. They each make in excess of $3 billion per year selling ads. If everything went to steaming only, who would watch ads? The more shows are streamed and the more people use DVRs, the less valuable an ad is to a company wishing to advertise.

It seems simple, but at the end of the day the providers make most of their money from ads and are perfectly content to make exclusive streaming deals with cable companies because stifling streaming helps keep their ad pricing high. They are not willing to increase their streaming rights income only to have their ad income decimated.

quote: Of course, but the providers are in bed with the cable companies. CBS, FX, ESPN, etc. will not release first runs on NetFlix or Hulu.

No. CBS, FX, ESPN, and others gets paid by product manufactures that made the ads. Cable providers have contracts with all the stations. Every stations has their own say on the pricing and where to be position in the channel line up.

quote: If everything went to steaming only, who would watch ads? The more shows are streamed and the more people use DVRs, the less valuable an ad is to a company wishing to advertise.

The only companies that gets punished by people that do streaming are the stations. Cable providers has their own streaming service, but it has limitations that few people use it. I do not use it because can not pause, rewind, fast forward, so it is not any different than being a slave of the schedule. People that use DVR still have ads recorded, so a DVR does not hurt anybody. Streaming only hurts cable providers because they implemented their own on-demand service which streaming is basically on-demand service. Streaming services like Netflix and Hulu implemented a better on-demand service because can be paused, fast forward, and rewind.

quote: It seems simple, but at the end of the day the providers make most of their money from ads and are perfectly content to make exclusive streaming deals with cable companies because stifling streaming helps keep their ad pricing high. They are not willing to increase their streaming rights income only to have their ad income decimated.

Cable providers makes money from customers that include add-ons and set top boxes. Also some cable providers has extra service of showing ads from local companies that prefer to be demographic.

The only thing I can imagine why cable providers are making streaming a big problem for them is they hate maintaining the equipment and paying for huge amount of data.

Wow, I'm used to Liberals arbitrarily blaming innocent people for complicated issues just because they're acting in the natural state of personal self-interest..but you? Wtf?

So let me get this right, you want to "blame" me for this problem because I prefer Netflix largely due to it's lack of commercials? That makes no sense!

Netflix has always been commercial free. It's not like I personally, Reclaimer77, stormed their gates and single-handed got them to remove all commercials from their service.

quote: I don't mind ads as much as I mind having to pay a ton of money to cable for the 10-15 channels I want.

You don't have to, that's the thing. I know it seems like you do, but you don't. Believe me, you can live without those channels. This is just entertainment after all people.

I cut the cord years ago, and life couldn't be better. I have Netflix and a few other streaming sites. When football season cranks up, I watch the games over the air (in HD no less). And for anything else, I pirate. Yup I said it, and I don't think I'm part of any silly "problem". Least of all people wanting more and more profits despite all-time high's in revenue!

If you think about it, maybe those who've accepted the status-quo for years and decades are part of the "problem" too.

I was thinking about cutting the cord (now that I can stream F1 races live) but I'm interested in seeing where DirecTV is taking VOD. There are increasing more regular TV shows being offered on demand. I want to see if they totally switch to that or not or maybe do something else entirely. Curiosity is keeping me from going your route for now.

This is exactly what the music industry faced not too long ago. How did they respond? Suing tons of people, including many innocents. How did the public react? Buying less music. it's a vicious spiral with incompetent businessmen. A good businessman would find a way to adapt, like putting up a music service where people could buy it in the format customers prefer. (You'll never see me type this again, but thank you, Steve Jobs, for pushing iTunes into reality. you saved us from stupid music executives.)

I have to say no thank you to him for gutting further sound quality improvements. Instead of getting something better than 16-bit 44 KHz, we ended up with 128k AAC (and now a whopping 256 KHz). Color me unimpressed.

But, Jobs or no Jobs, sound quality was already basically dead because of the lovely practice known as clipping.

No stream? No watch! my family can do without TV There are so many different forms of entertainment this day and age! like family game night!(Minecraft). Recently they upgraded the firmware on my AppleTV to include an HBOgo channel. I thought its about damn time these guys get modern, get smart...HBOgo requires an HBO subscription associated with a cable plan...dumbasses! WOW! I will never go back to cable or satellite that horse has left the barn! We will sooner do without.

Hulu and Netflix come along and offer better movie and TV options than cable TV (for most people), so instead of coming up with a better product, the cable companies are just going to try to screw everyone? No wonder cable companies are hated by consumers.

I was happy to ditch the over-priced Cox cable TV service for Hulu and Netflix. I am planning to ditch their phone service and use Ooma. Hopefully one day I can ditch Cox's overprice internet service.

Hrmm, so the article claims that its republicans who are trying to screw us over in respect to this article, and then one of the two links they list, regarding the bill to allow the govt to imprison people for up to 5 years for copyright infringmenet:

Dozens of Senators accepted contributions from these lobbies. But it's important to identify the bill's biggest supporters.

Leading the way is U.S. President Barack Obama. Obama pledged to look into copyright reform, but those promises were conveniently shelved when he stepped up to the plate pushing his campaign donors real agenda -- copyright enforcement. Together with fellow nations like France, Britain, and Germany, the Obama administration has worked to install a secret treaty called the Anti-Counterfeiting Trade Agreement (ACTA) whose draft contains many Orwellian provisions, including the introduction of copyright infringement "thought crime", where simply searching for infringed content (thinking of infringing) can lead to charges.

What the heck does this have to do with net-neutrality? Simple - dont pirate and you wont get in trouble with pirating. As for as net-neutrality - that does not have to do with pirating, it has to do with whether a service provider can stop you from using competing services to their own (either through throttle or your speed, or charging extra) to force you to use their offering and put others out of business.

I have no idea which side is pushing for this, but I dont really care, cause 90% of both sides of the isle are corrupt at this point, and honest people dont last long in Washington. Either they change or get booted since they cant afford the money to be reelected.

Duh. The proper way to react to this kind of threat is to adapt or die. To force others to take it "our way or no way" is totally piss poor business practice. These guys, as I have said before and will keep saying, are idiots when it comes to business. they're just going to make their own customers resentful. That will come back and bite them, hard, in the behind sooner or later. That's the way business works. If you do stuff that pisses off your customers, then you lose business. If you do that as a monopoly, you face revolution.

You can't shut down the pipe if it isn't your pipe...LOL. Bring on Gbit internet google. Roll it out everywhere then cut out cable totally until they just bleed to death. I'd happily pay the same $100 to google as I do now for unlimited internet but with google being 18-20x faster. It will take me seconds to fill out my NEW ISP application with google (yeah, you'll actually see smoke from my keys being punched so fast).

Cable needs to die (or cut the price in half and give me all channels...LOL). Bring on Google/Intel/MS/Apple as ISP's and let them all bring prices down and speeds up. Not to mention google gives away internet to the poor and still makes money even at $75 for Gbit unlimited (and it hits about 700-800Mbit in use). Cox will lose me the second google is offered in my area.

Roku+Playon+Plex+Netflix. I need nothing else but unlimited ISP. I can't wait for 4-5 people to compete for my $100 which should bring it down or at worst speed me up 20x. I'd happily pay netflix $15 to allow even more content. It's dirt cheap anyway. On demand is awesome for retired people. My parents currently watch a ton of shows we never even see in USA. Mcleod's Daughters right now (224 episodes, the entire thing) is their fav. Tons of brit shows too. When Mcleod's finishes they plan on watching Fringe I think (since it's over now too). If it wasn't for netflix I think they'd be bored to death...LOL. I think there's a few thousand documentaries on there too (50-100 of those in their queue). Their queue is 500 or so with about 80 TV series in there...ROFL. They are so hooked they will only watch shows that have ended now. They like watching episode after episode until done. Commercials are now against their religion...LOL. Mine too. :)

It's funny to watch how they've changed their habits in less than 2yrs on roku/netflix etc. They have an antenna but watch OTA stuff maybe a few hours a week tops for some news crap. I've become an interruption to them and netflix...LOL. "come in and watch some mcleods or go away, we have to get back to our show"...Sheesh. My guess is there would be some kind of old folks march organized if anyone tries to take away netflix/aod etc. I think my mother would be toting her Glock in seconds.

"What would I do? I'd shut it down and give the money back to the shareholders." -- Michael Dell, after being asked what to do with Apple Computer in 1997